Inchcape’s better-than-expected results for the first quarter have led to financial experts increasing their predicted value of the company.
Reported group revenue rose by two per cent on an organic basis, with distribution revenue up by four per cent year on year, again on an organic basis.
That followed the news that Inchcape was offloading some of its Russian dealership operations for £70m as it looked to increase its focus on distribution, which was 40.5 per cent of revenue in 2011, said Zeus Capital, and is now 61.2 per cent based on Zeus’s 2021 forecasts.
Mike Allen, research analyst at the investment banking operation, said: ‘We have updated our forecasts accordingly and our intrinsic value increases to 1,045.5p.’
That’s 33.8 per cent up on its share price at the time of the forecast being produced, and which Zeus Capital said it believed was achievable within three years. It was tempered, though, with caution caused by supply constraints in the new car market.
Allen added: ‘Due to the fragmentation of the distribution market, Inchcape has plenty of acquisition opportunities that it could pursue to achieve significant long-term earnings growth.’
Inchcape, which will announce its interim results on July 29, has outperformed the FTSE 250 by 11.5 per cent during the year to date, said Allen.
Estimated revenue for 2021 has been revised upwards from £7.165bn to £7.174bn, while estimated pre-tax profit is similarly expected to be better, rising from £2o9.2m to £211.6m. Estimated EBITDA is £376.6m.